STATE OF PUNJAB Vs. ATUL FASTENERS LIMITED

JUDGEMENT

(1.) On 20.12.2001 Deferment Certificate was granted by the Sales Tax Department to the respondent-assessee for the period April 30, 1997 to 29th April 2004. Under that Certificate the quantum of benefit of tax deferment was Rs.62,47,500/-. The said certificate stated that the assessee was entitled to the benefit of tax deferment subject to the maximum of Rs.62,47,500/-. The assessee had commenced its commercial production on April 30, 1997. The assessee had applied to the Industries Department for grant of Eligibility Certificate. That Certificate was however granted only on 13.9.2001 for 84 months ( 7 years) commencing from April 30, 1997. The Deferment Certificate was given by the Sales Tax Department based on the Eligibility Certificate only on 21.12.2001. After the grant of Eligibility Certificate on 21.12.2001 the assessee availed the deferment of tax for the period from 1.10.2001 to 29.4.2004 amounting to Rs.33,48,600, as against its total entitlement of Rs.62,47,500/-. The case of the assessee is that during the period 30.4.1997 to 30.9.2001 it had deposited/paid an amount of Rs.42,62,807/-. Consequently, assessee seeks refund of the tax amount paid by him during the period 30.4.1997 to 29.9.2001. This claim has been granted by the impugned judgment. Hence this civil appeal by the Department.

(2.) The short question which arises for determination in this case is whether the Department was liable to pay interest @ 18% p.a. on Rs. 42,62,807/- from 21.12.2001 till refund/adjustment.

(3.) At the outset it may be noted that the entitlement of the assessee to the grant of benefit of tax deferment is not in issue. The quantum of the benefit is not in dispute. Similarly, the period commencing from 30.4.1997 to 29.4.2004 is also not in dispute. Under the Deferment Scheme read with Punjab General Sales Tax (Deferment and Exemption) Rules, 1991, on expiry of 7 years (84 months) i.e. on 29.4.2004, the assessee who was allowed to retain the tax collected by it on behalf of the Department had to repay it in 3 instalments. In the present case the first instalment of repayment by the assessee became due on 29.4.2004, the second instalment became due on 28.4.2005 and the third instalment became due on 28.4.2006. The assessee had filed a writ petition in 2004 for refund.